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                                                         January 2011



GRR Intellectual Property News is a newsletter issued by Gottlieb, Rackman & Reisman, P.C., an IP boutique.

The purpose of this newsletter is to keep in touch with our friends and colleagues as well as provide practical information and news relating to Intellectual Property law.

Please forward this newsletter to anyone who might be interested.

Previous issues of GRR Intellectual Property News can be found on our
website.
GRR NEWS
GRR Client Obtains Patent for Device to Aid the Visually Impaired

Professor John J. Stapleton, represented by GRR attorney Ted Weisz, recently obtained Patent No. 7,843,488.  The patent describes a revolutionary device that will help visually-impaired people see.  The device translates visual images into corresponding thermal images.  The thermal images are then presented to thermal elements that are in contact with a person's skin; the contacts generate infrared signals at wavelengths that are sensed by receptors in the skin and are perceived as actual images by the person.

IP LAW IN PRACTICE
It's Platinum...Or is It?  The FTC's New Rule

Effective December 28, 2010, the Federal Trade Commission ("FTC") issued new Rules (available here) regarding the marketing of platinum jewelry. The new rules require the disclosure of the following prior to sale:  "(1) the product's full composition, by name and not abbreviation, and the percentage of each metal it contains - for example, 75% Platinum, 25% Copper or 60% Platinum, 35% Cobalt, 5% Rhodium; and (2) disclose that the product may not have the same attributes or properties as traditional platinum products, which are comprised of at least 85 percent pure platinum."

The second disclosure may not be necessary if the marketer (which includes anyone who is advertising the jewelry for sale) has "competent and reliable scientific evidence that a product is materially the same as one containing at least 85 percent pure platinum, based on a variety of attributes such as durability, luster, and hypoallergenicity."

These are not the only rules which jewelers need to follow. The National Stamp Act, 15 U.S.C. 297, requires that any jewelry indicating that it is made in whole or in part of gold or silver or an alloy of either metal must also be marked with the registered trademark of the manufacturer or with a trademark which is pending before the US Trademark Office. Jewelers usually adopt initials to satisfy this requirement given limited space available on the jewelry.  The FTC also requires that all jewelry be marketed in a fashion which doesn't mislead the consumer, for example, revealing the correct karat content and type of pearls.

 

For more information, contact Amy B. Goldsmith.

All You Need to Know About Transactions

Over the past year, and as in years past, GRR has been involved in drafting, advising on and negotiating licensing, distribution, acquisition, franchising and other type of agreements directly or indirectly involving the intellectual property of our clients or where our clients were the recipients/licensees of other party's rights.

 

One of the most recent transactions GRR worked on, finalized in record time, involved an independent contractor agreement between one of our clients, a company in the business of providing mobile solutions for brands, retailers and other organizations, managing and marketing mobile applications and mobile websites, and an independent contractor. Negotiations between the parties reached an impasse over issues relating to confidentiality, a non-competition agreement, the non-solicitation of employees and the ownership of intellectual property.  At our client's request, GRR stepped in to assist in resolving the impasse; GRR began negotiations with the independent contractor's lawyer, and the agreement was signed within 48 hours.

 

GRR's approach to negotiating an agreement is based on the following premises:

 

1) Lawyers must make sure that the parties first agree on the terms of the deal and there is total clarity and transparency in what they would want to accomplish.

 

2) Once there is clarity on the commercial terms and what the parties are seeking in an agreement, negotiation is just working the problems out so that both parties and their lawyers are satisfied with the final outcome.

 

3) A lawyer should carefully prepare for the negotiation by understanding the client's position to know what the client is willing to compromise on and where the lawyer will need to suggest creative alternatives so that the client can achieve its goal.

 

4) When the agreement is finalized, both parties should feel that they have accomplished their goals. Compromising on certain points during the negotiation may result in gaining concessions on others.  

 

5) A lawyer should be familiar enough with their client's business to explain to the other side's lawyer why certain terms would be more onerous than others for the client.  Familiarity with the client's business will allow a lawyer to spot tricks or seemingly innocent provisions that could have a significant negative impact on the client's business.

 

The most important point is to make sure that the other side's lawyer understands that the respective clients want to reach an agreement and the negotiation does not become a legal competition! If an agreement is not reached the lawyers may be the only losers!

 

GRR has also assisted various U.S. and foreign companies in dealing with franchising agreements to make sure that our clients are aware of the issues pertaining to "hidden franchises" in licensing agreements. If a license agreement is construed to be a franchise agreement, it could have significant regulatory consequences.

 

In the past year, GRR has also assisted clients with asset purchase agreements, conducting due diligence with respect to the assets being purchased and advising on the terms of the agreement

 

GRR also has expertise in endorsements agreements, sponsorship, image rights and promotional agreements dealing with celebrities and sports figures.

 

For further information contact Diana Muller or Marc P. Misthal.

New Design Piracy Bill Presented to Senate

After years of debate and compromise, the Senate Judiciary Committee, by a unanimous vote, recently passed the Design Piracy Bill (see our prior article here). It is expected to be presented to the Senate again this year with strong predictions of passage.

 

Currently, apparel designs do not qualify for copyright protection, except in limited circumstances. The new bill will add to existing copyright laws and protect "unique and original" fashion designs against knockoffs by copiers who seek to piggybank on the works of originators.

 

The bill is a compromise among many voices at different levels in the fashion industry supply chain who wanted to make certain that useful and public domain designs are freely available while truly artistic creations are protected.  The bill grants protection to fashion designs for three years and protects only against deliberate copies that are "substantially identical in overall appearance" to the protected design.

 

The bill is specifically intended to protect fashion design including men's, women's and children's clothing, underwear, footwear and headgear, handbags and belts, and eyeglass frames. The bill further requires that in a lawsuit the designer/plaintiff prove that the copier was aware of the protected design. In contrast to works protected by the Copyright Act, fashion designs would be protected without any registration.

 

When and if Congress passes this legislation, protection for the fashion industry will be significantly enhanced.


 

For further information, contact George Gottlieb.
 

To Be or Not To Be...Gray.  The Supreme Court Does Not Answer the Question
Costco and Omega recently battled it out before the Supreme Court, and the Court's decision was highly anticipated.  The case involved genuine watches with Omega's copyrighted "globe" symbol which were manufactured outside the U.S., imported into the U.S., and purchased and resold by Costco at discount prices.  Such products are commonly known as "gray goods," and consumers like them because they are genuine and are typically less expensive than goods manufactured for the U.S. market.  The central issue in the case was whether the first sale doctrine (which says that once a product is lawfully made and sold for the first time, it can be subsequently resold with no limitations) applies to products manufactured outside the U.S. and then imported into the U.S.  Unfortunately, the Supreme Court did not answer this question, leaving the issue to each of the lower courts to decide.

In an earlier decision in the case, the Ninth Circuit Court of Appeals ruled that the first sale doctrine applies only to products manufactured in the U.S.  This decision empowered copyright owners but dismayed big box companies.

So why didn't the Supreme Court address this issue? Justice Kagan, who had been involved in the case when she was formerly the Solicitor General, did not participate in the decision.  Without her, the Supreme Court deadlocked, 4 to 4, and thus the Ninth Circuit's decision was affirmed, with no commentary from the highest court at all.

Where does this decision leave manufacturers and consumers? In limbo, with different rules applicable depending on where in the nation the gray market goods are sold. In the Ninth Circuit (Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington), big box companies are prohibited from importing and selling gray market goods originally manufactured outside the United States. Cases in the courts in New York have come to this conclusion as well (although under an earlier Supreme Court decision, genuine product manufactured in the U.S., sent abroad, and then returned back to the U.S. for subsequent sale was subject to the first sale rule, and the copyright owner couldn't prevent such subsequent sales in the U.S.).  But for complete consistency nationwide, we'll have to wait until a similar case reaches the Supreme Court.

For further information, contact Amy B. Goldsmith
IP DEVELOPMENTS
Research Contract Resulting in Prior Invention in Another Country is Insufficient to Defend Against Patent Infringement
 

Solvay S.A. v. Honeywell International, Inc., 2009-1161 (Fed Cir. Oct. 13, 2010).

 

In early 1994, Honeywell (then AlliedSignal, Inc.) entered into a research contract with the Russian Scientific Center for Applied Chemistry ("RSCAC").  Under the contract, RSCAC developed a new process for making a chemical used in the manufacture of refrigeration and heat storage systems.  RSCAC developed the process in Russia and sent a report, detailing the invention, to Honeywell in the U.S.  Honeywell used the report to duplicate RSCAC's experiments with similar conditions and equipment.  Later in 1995, Solvay filed a patent application for the same process. 

 

Solvay's application issued as a patent and Solvay sued Honeywell for patent infringement.  Honeywell defended the action, asserting a defense based on prior invention in this country by another who had not abandoned, suppressed or concealed it.  Honeywell argued (and the District Court agreed) that Honeywell conceived the invention in the United States upon receipt of RSCAC's report.  Accordingly, the District Court found the patent invalid.  On appeal, the Federal Circuit reversed and found the patent valid.  The Federal Circuit held that Honeywell could not be an inventor for purposes of the 102(g) defense because Honeywell never conceived of the invention.  (Invention requires conception of an idea and reduction of that idea to practice.)  RSCAC was the inventor though RSCAC was not in this country.

 

The ruling is a tough one for Honeywell.  They had possession of the invention prior to Solvay, but Honeywell cannot use this fact as a defense to patent infringement.  Other than publicly disclosing the invention upon receipt from RSCAC, it appears that all Honeywell could have done to protect itself was file a patent application on behalf of RSCAC and assign the application back to Honeywell.  The lesson learned from this case is that possession and ownership are not the same.

 

For further information, contact Joshua Matthews.  Co-authored by Maysa Razavi.

Intellectual Property News Editorial Board:   Amy B. Goldsmith (agoldsmith@grr.com), Richard S. Schurin (rschurin@grr.com), Marc P. Misthal (mmisthal@grr.com) and Steven Stern (sstern@grr.com) of Gottlieb, Rackman & Reisman, P.C.

Suggestions, questions and comments should be directed to the Editorial Board by email or telephone (212) 684-3900.

For forty years, Gottlieb, Rackman & Reisman, P.C. has provided legal advice and guidance on all aspects of patent, trademark, copyright, and unfair competition law, tailoring its counsel to the specific needs of its clients. 

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